Buy 10-Year Malaysian Bonds as Bearish View Overdone: StanChart
(Bloomberg) -- Investors should buy 10-year Malaysian govt bonds at 4.11% on an unhedged currency basis, analysts at Standard Chartered including Lawrence Lai, write in note Friday.
- Position targets 10-year yield at 3.8% with stop-loss 4.30%
- Current bearish outlook for MYR debt may overstate the risks as curve steepening pressure from USTs has eased and BNM still has room to lower policy rate
- Supply risk for long-end MYR debt is higher in 2017 but local demand is constructive and negative foreign sentiment towards ringgit notes has eased
- Valuation-wise, total returns for MYR debt are attractive among low-yielding Asian local currency
- 10-yr Malaysian bonds offer 142-bps pick-up over similar-maturity Thai debt
- MYR is undervalued as it has lost 7% since February 2016 while crude prices have climbed 180% during the period
- NOTE: Malaysia 10-year yield up 2bps to 4.13%
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Lai Yew Son (Lai & Co)
Lawrence Lai (Standard Chartered PLC)
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